An Oil-Soaked Globe as Production Keeps Climbing and Demand Falls

An oil well in Texas owned by Apache Corporation, the object of a failed bid last week from Anadarko Petroleum. Many in the oil industry expect large companies to buy small operators.Credit Spencer Platt/Getty Images

HOUSTON — Such is the state of the oil industry these days that there is sometimes nowhere to put the oil. Off the coast of Texas, a line of roughly 40 tankers has formed, waiting to unload their crude or, in some cases, for a willing buyer to come along. Similar scenes are playing out off the coasts of Singapore and China and in the Persian Gulf.

There is little sign that the logjam will ease, as the price of oil continued its yearlong plunge this week, declining by nearly $10 a barrel.

The renewed collapse in crude prices is helping to again drive down gasoline prices for American drivers, to a national average of $2.19 a gallon for regular gasoline on Friday, according to the AAA motor club. That is 9 cents below the price a month ago and 73 cents below the price a year ago.

The slide in oil companies’ fortunes has been significant because of expanded production in Russia, Saudi Arabia and other Persian Gulf states, as well as a slowdown in demand growth in China and the expectation by commodity traders that the Iran nuclear deal will introduce large quantities of oil to the glutted market.

While the crude oil tanker backlog in Houston reaches an almost unprecedented 39 (with combined capacity of 28.4 million barrels), as The FT reports that from China to the Gulf of Mexico, the growing flotilla of stationary supertankers is evidence that the oil price crash may still have further to run, as more than 100m barrels of crude oil and heavy fuels are being held on ships at sea (as the year-long supply glut fills up available storage on land). The storage problems are so severe in fact, that traders asking ships to go slow, and that is where we see something very strange occurring off the coast near Galveston, TX.

FT reports that “the amount of oil at sea is at least double the levels of earlier this year and is equivalent to more than a day of global oil supply. The numbers of vessels has been compiled by the Financial Times from satellite tracking data and industry sources.”

The storage glut is unprecedented:

Off Indonesia, Malaysia and Singapore, Asia’s main oil hub, around 35m barrels of crude and shipping fuel are being stored on 14 VLCCs.

“A lot of the storage off Singapore is fuel oil as the contango is stronger,” said Petromatrix analyst Olivier Jakob. Fuel oil is mainly used in shipping and power generation.

Off China, which is on course to overtake the US as the world’s largest crude importer, five heavily laden VLCCs — each capable of carrying more than 2m barrels of oil — are parked near the ports of Qingdao, Dalian and Tianjin.

In Europe, a number of smaller tankers are facing short-term delays at Rotterdam and in the North Sea, where output is near a two-year high. In the Mediterranean a VLCC has been parked off Malta since September.

It was a bruising day for Europe’s energy sector Thursday, with the full extent of the pain caused by low oil prices being laid bare in a series of earnings reports.

Anglo–Dutch multinational Royal Dutch Shell (RDSA-GB) reported a loss of $6.1 billion, compared with a gain of $5.3 billion for the same quarter a year ago, a decrease of 70 percent. This included a large $8.2 billion write-off due to a downward revision of its oil and gas price outlook and also a decision to halt projects in Alaska and Canada.

Oswald Clint, senior analyst at Bernstein, called these impairments a “necessary evil” which would allow a “new” Shell to emerge that could focus on natural gas and deep water drilling. James Sparrow, a credit specialist at BNP Paribas. called it a “kitchen sinking” exercise ahead of its merger with BG Group (@BGLFDC16J-GB).

The news didn’t stop there. French major Total (FP-FR) reported a 23 percent drop in third-quarter adjusted net income from the same quarter last year, although CEO Patrick Pouyanne spoke of “resilience” in the face of falling oil prices. Analysts were pleased with the results, too. Sparrow, called the numbers “encouraging” while Oswald noted that it had benefited from not having made any big investments into the U.S. shale sector.

A new law suit claims some of the world’s largest oil companies – including BP, Royal Dutch Shell, manipulated Brent Crude spot prices in collaboration with Morgan Stanley, Vitol Group, and other energy traders.

The plaintiffs accuse the companies of deliberately submitting false and misleading information about Brent prices to Platts, the energy and oil market news outlet, which is used by traders worldwide in daily transactions, Bloomberg reports.

By fixing the North Sea oil benchmark, the oil companies and traders, not only manipulated the oil market, but petroleum, food, and other products that look to Brent as a guide for buying and selling across world exchanges.

Four traders – John Devivo, Robert Michiels, Anthony Insinga and Kevin McDonnell – filed the class act in a Manhattan court in New York on October 4.

I have gone through the Oil Sands Fact Check site and honestly all I can find is boasting as to the boon in the US economy, jobs and the fact that activists are using the pipeline and tar sands oil as a scapegoat. Not once in all the supposed facts they have there do they address the real concerns, simply twisting the facts to their advantage. Painting themselves as responsible entities. Never once addressing that this substance is way more dangerous than oil to the environment and the water, especially. The tap dance over the fact by stating that tar sands oil has been transported into the US for decades.

What they fail to miss is this: Instead of reporting the factual analysis of the toxic substances that this tar sand emits they skirt over the fact claiming their emissions testing results. Now please correct me if I am wrong , but the major concern of environmentalists and activist is not the emissions once it is in the car. In fact the concern is of the damage the unrefined substance will do to the environment and the water shed if a spill were to take place. As we can see in Arkansas the substance is so toxic that the residents are already suffering from it’s effects .

They call themselves responsible entities, so then my question is this :

what is Exxon doing to make this right?

Exxon has stated that the water quality was within safe limits.

So what exactly does that mean ?

Are we to accept the status quo with regards to safety limits just as we are to accept that GMO’s are good for us even though there are more and more opponents coming out stating that it is in fact detrimental to human health?

What about the air quality? Or does that not matter?

Children are getting sick. People are becoming ill due to the toxic conditions.

Are we to believe this is acceptable ?

Or will this also be kept from the people and the sick treated like insignificant data as the people of the gulf were?

Good health once it has been compromised cannot be replaced.

Will your tar sands oil paycheck take care of it?

There is no amount of compensation that will replace good health. Nor erase catastrophic illness.

Or does it not matter because it isn’t your family?

I am sorry to break it to you , but unless you have a crystal ball that tells you otherwise . It could very well be you and your family that suffers next! Do not delude yourself by detaching from the reality of things entertaining the belief that it won’t happen to you . I am sure the people of Mayflower , Arkansas never imagined they would now be mired in this poison. Their children getting sick and their homes surrounded, helpless waiting for some heartless oil company to decide whether the clean up is worth the expense. Not the lives of the people affected by their poison, but their bottomline.

Don’t kid yourself!

With the lack of responsibility and lack of corrective action taken by oil companies in Africa. With leaking pipelines and toxic sludge where lakes had once been. Dead soil where crops were once grown.

How can anyone in their right mind take the word of these companies as to their integrity and responsibility?

We have seen what BP did in the Gulf Of Mexico.

Do you truly consider what was done in the gulf an adequate job of cleaning up the mess made by their incompetence and lust for profits?

The sea life dying as a result and scientists complaining that they have been legally gagged from making their findings available to the public.

Restrained by whom?

The oil companies?

No restrained by the government that is supposed to be looking out for our benefit. Instead they are protecting the Oil Companies interests.

Is this the kind of safety measure you want?

The reins handed over to a company who’s haste for fattening up their bottom line poisons our earth , our air and our water so that they can police themselves?

How many journalists were kept away from the Gulf to keep them from reporting what they saw there?

How many reporters were kept from Mayflower, Arkansas for the same reason?

Everyone is crowing about the jobs the tar sands oil will bring to the US.

Are you truly understanding what you are asking for?

Do you even understand that Mayflower Arkansas could be anywhere in the heartland?

Do you realize what would happen if that pipeline leaked into the water shed.?

It would not be someone else’s problem , it would be everyone’s problem . You are looking for jobs, yes we understand. We all live here in the States and we are all going through the same hard times. We all need to work and we all need to pay our bills.

Where do we draw the line at what is admissible and what is over the not?

There is only one Earth and when she is completely trashed where will you go ?

Will your job with tars sands oil help you bring her back ?

Will you be able to remove the horrible toxins deposited by your tars sands oil from the earth,the rivers, the water?

Are you not paying attention to what is happening around you?

I want you to understand one very important thing. The responsibility for the destruction of our environment is not just on the oil companies. It is on everyone of you who don’t give it a second thought. On everyone of you that takes clean air ,and water for granted. On everyone of you that places a job over the well being of your children and your fellow American’s children. This is not a game this is a very hazardous situation that has grave consequences and until all of you realize that , we are lost.

Money has become the denominating factor in our lives.

What happened to principal , responsibility and honor.

What happened to doing what is right ?

Where is the concern for our children’s well being?

I see my fellow citizens on a collision course with destruction, hell bent on ignoring the warning signs. Their eyes on the prize of money and material things.

One wonders how much that money and those materials possessions will help when you can no longer give your child a cup of clean , safe water to drink?

Excerpts taken from Oils Sands Fact Check

On March 29, an oil pipeline running through Mayflower, Arkansas experienced a leak that resulted in the evacuation of 22 homes and immediate clean up efforts from the pipeline’s operator, ExxonMobil. According to reports, the Pegasus line was carrying Wabasca Heavy crude oil – a blend of crude produced in the Athabasca oil sands region in Alberta.

Of course, in the minds of oil sands opponents, all pipelines are made alike and are uniformly threatened by oil sands crudes. In fact, following the news of the incident, Rep. Ed Markey (D-Mass.) stated:

“This latest pipeline incident is a troubling reminder that oil companies still have not proven that they can safely transport Canadian tar sands oil across the United States without creating risks to our citizens and our environment.”

We have the top five reasons why that’s not the case.

1) Oil sands crudes have been transported safely in the U.S. for more than 40 years. Accident reports from the Pipeline & Hazardous Material Safety Administration (PHMSA) from 2002 through mid-2012 show zero internal corrosion-related releases from pipelines carrying diluted bitumen.

2) Oil sands crudes are not more corrosive than other crude oils. In a 2011 report, Canadian research group Alberta Innovates found that acid and sulfur compounds found in oil sands crudes “are too stable to be corrosive and some may even decrease corrosion.” Recent testing and studies by ASTM International and Penspen support this conclusion.

3) Oil sands crudes are transported at comparable pipeline pressures as other heavy crude oils. All U.S. pipelines must operate under Maximum Operating Pressure limitations administered by PHMSA. In other words, pipelines are constructed to specifications that ensure they can handle the intended operating pressure and the type of liquid that flows through them.

4) Oil sands crudes are not heated for transportation in pipelines above the temperature of other crude oils. The range of temperatures for all crude oils from Canada is 40-135 degrees Fahrenheit. The American Society of Mechanical Engineers (ASME) Code for Pipeline Transportation Systems forLiquid Hydrocarbons and Other Liquids does not consider pipeline temperatures to be elevated unless they exceed 150 degrees Fahrenheit.

5) Keystone XL would “have a degree of safety over any other.” As mentioned in point #3, pipelines must meet certain specifications before transporting any type of crude, no matter if it’s heavy or light. Keystone XL, which will also carry heavy oil from Alberta, is going above and beyond those requirements by adopting 57 extra safety measures, leading the State Department to declare that the project would “have a degree of safety over any other.”

Citizen group sees ‘toxic’ oil soup in Arkansas

LITTLE ROCK, Ark., April 30 (UPI) — There’s been a “toxic soup” hanging over residents in Mayflower, Ark., as a result of an Exxon Mobil oil pipeline accident, a citizen’s group said.

Exxon said about 5,000 barrels of oil was released last month from a 22-foot rupture on its Pegasus pipeline in Mayflower. The pipeline, built in the 1940s, was carrying a diluted form of Canadian crude oil, dubbed oil sands, at the time of the spill.

Air samples taken March 30, the day after the incident, indicated high levels of compounds considered harmful to human health. The samples were conducted by a student activist trained by the Faulkner County (Ark.) Citizens Advisory Group and Global Community Monitor.

“Total toxic hydrocarbons were detected at more than 88,000 parts per billion in the ambient air and present a complex airborne mixture or soup of toxic chemicals that residents may have been exposed to from the Mayflower tar sands bitumen spill,” Neil Carman, a representative from the Texas chapter of the Sierra Club, said in a statement.

Exxon admitted to finding levels of benzene and other harmful chemicals in early samples taken at Mayflower. It said air and water quality was within safe limits in the weeks following the spill, however.

The report, published by the activist groups, said residents are showing signs of exposure to chemicals ranging from benzene, a carcinogen, to toluene, a central nervous system depressant, more than four weeks after the spill.

Roughly four weeks after the spill took place, many basic details are still unknown to the public, according to recent reporting by InsideClimate News. Questions include what exactly caused the spill, how big was the spill exactly, and how long did it take for emergency responders to react to the spill, to name a few.

But one thing is certain according to the new study: For the residents of Mayflower, quality of life has been changed forever.

All of these chemicals are hazardous air pollutants (HAPs), “regulated under the 1990 Federal Clean Air Act amendments as the most toxic of all known airborne chemicals,” as explained in the press release summarzing the study.

By Sean Cockerham | McClatchy Newspapers

WASHINGTON — Ten years after the United States invaded and occupied Iraq, the country’s oil industry is poised to boom and make the troubled nation the No.2 oil exporter in the world. But the nation that’s moving to take advantage of Iraq’s riches isn’t the United States. It’s China.

America, with its own homegrown energy bonanza, isn’t going after the petroleum that lies beneath Iraq’s sands nearly as aggressively as is China, a country hungry to fuel its rise as an economic power.

Iraq remains highly unstable in terms of security, infrastructure and politics. Chinese state-owned oil companies appear more willing to put up with that than Americans are.

“The Chinese have a higher tolerance for risk,” said Gal Luft, a co-director of the Institute for the Analysis of Global Security, a Washington research center focused on energy.

The International Energy Agency expects China to become the main customer for Iraq’s vast oil reserves. Fatih Birol, the agency’s chief economist, recently declared “a new trade axis is being formed between Baghdad and Beijing.” Birol said that about 80 percent of Iraq’s future oil exports were expected to go to Asia, mainly to China.

Iraq’s potential for oil production is huge. The International Energy Agency predicts that Iraqi production will more than double in the next eight years and that the country will be by far the largest contributor to growth in the global oil supply over the next two decades. By the 2030s, the agency expects Iraq to become the second largest global oil exporter, overtaking Russia.

An unnamed Pakistani official confirmed on Friday that an Iranian-Pakistani consortium will start working on the gas pipeline as of March 11, 2013.

The date was announced after Pakistani President Asif Ali Zardari held several meetings with Iranian officials in Tehran earlier this week.

The pipeline will enable the export of 21.5 million cubic meters (mcm) of Iran’s natural gas to Pakistan on a daily basis. Iran has already built more than 900 kilometers of the pipeline on its soil.

Pakistan faces a crushing energy crisis which has caused difficulties in financing the pipeline which stretches from the border between the two countries to Nawabshah region in Pakistan.

Washington has repeatedly voiced its discontent with the joint project, but Pakistan has constantly dismissed rumors that it might pull out of the project amid efforts by the United States to convince the country to abandon the pipeline.

Last month, the Wall Street Journal said in a report that the United States had threatened Pakistan with stringent sanctions if it goes through the project.

“Washington has made it clear that it will impose economic sanctions on Islamabad if it begins to buy gas from Iran. Besides, the UN has mandated sanctions on any trade with the oil-rich country,” the report added.

Iran, the second largest owner of gas reserves in the world after Russia, has said it will provide USD500 million to help Pakistan build the pipeline on its side of the border.

Managing-Director of the National Iranian Gas Company Javad Owji said on February 26 that the Iran-Pakistan gas pipeline is expected to be constructed in 22 months on the Pakistani soil with the participation of Iran.

Oil prices drop below $94 per barrel

By PAMELA SAMPSON | Associated Press – 14 hrs ago

BANGKOK (AP) — Oil fell below $94 a barrel Thursday as disagreement among U.S. Federal Reserve officials about its super easy monetary policy weighed on prices ahead of the release of a report on U.S. crude inventories.

Benchmark crude for April delivery was down $1.64 to $93.58 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract lost $1.88, or 2 percent, to finish at $95.22 a barrel on the Nymex on Wednesday.

Oil prices were undercut by expectations for higher U.S. crude supplies when the Energy Department’s Energy Information Administration releases its weekly inventory report later Thursday.

Carl Larry of Oil Outlooks and Opinions forecast a rise of 1.5 million barrels.

“An increase in inventories here may seem like the best thing with refineries cutting runs, but we’re cutting our imports and increasing our domestic production,” he said in an email commentary. Ample supplies tend to lower prices.

The decision on whether to approve the Keystone XL pipeline will be the first major climate change decision Obama will make during his second term. And given Obama’s strong comments on climate change during both his inaugural address and the State of the Union, Whitehouse said it’ll be hard for him to approve the project.

“It would create a huge credibility gap with the administration if they go that way,” he said.

The southern portion of the pipeline — from Oklahoma to Texas — is already under construction, and the 1,179-mile portion from Alberta to Nebraska is awaiting approval of a presidential permit from Obama. Last month, Nebraska Gov. Dave Heineman approved a revised route for the pipeline after the state’s Department of Environmental Quality said the route avoided sensitive areas of the Sandhills region.

The State Department will incorporate the Nebraska evaluation into the supplemental environmental review that will help inform the recommendation Secretary of State John Kerry will make to the president. Kerry thus far hasn’t shown his hand on whether he supports the project or not, but has said that he is committed to studying the pipeline and finishing the process begun by his predecessor, Hillary Clinton.

Kerry’s first foreign guest in his new job was Canadian Foreign Minister John Baird, and the two stressed that the economies of the two countries were inextricably linked and important to the other.

But to California billionaire investor Tom Steyer, the idea that investment in Canada should be the basis for economic growth in America is folly, and he said the investment will keep the U.S. economy dependent on oil for decades.

DemocracyNow.org – Forty-eight people, including civil rights leader Julian Bond and NASA climate scientist James Hansen, were arrested Wednesday in front of the White House as part of an ongoing protest calling on the Obama administration to reject the Keystone XL tar sands pipeline. The action came before a rally planned for Sunday on Washington’s National Mall, which organizers have dubbed “the largest climate rally in history.” We speak to Sierra Club Executive Director Michael Brune, who was arrested in the first act of civil disobedience in the organization’s 120-year history.

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